ECB guarantees liquidity of Cypriot banks

Frankfurt, March 22 (IANS/EFE) The European Central Bank, or ECB, said Thursday it would guarantee the liquidity of banks in Cyprus until March 25.

“The Governing Council of the European Central Bank decided to maintain the current level of Emergency Liquidity Assistance (ELA) until Monday, 25 March 2013,” the ECB said in a statement posted on its web site.
“Thereafter, Emergency Liquidity Assistance (ELA) could only be considered if an EU/IMF programme is in place that would ensure the solvency of the concerned banks,” the ECB said.
There is uncertainty about the solvency of Cyprus’s banks without a plan to quickly recapitalize the banking sector.
The ECB can only provide liquidity to solvent financial institutions.
Officials in Cyprus hope to reach an agreement to deal with the financial crisis.
Cyprus, whose banks have been battered by their heavy exposure to Greek government debt, is the eurozone’s smallest economy.